Last week, Workforce Intelligence (formerly People Report) released results from the compensation portion of the 2013 Corporate Compensation and Benefits survey. Results showed salaries for restaurant hourly and corporate positions budgeted to increase on average by as much as 2.7% during 2013. Results represent data from 55 distinct chain restaurant corporations operating 83 restaurant concepts. These concepts represent many of the best-known brands in the industry across all industry segments: quick service, fast casual, family dining, casual dining, and upscale/fine dining. Some of the brands represented are T.G.I. Friday’s, Chili’s, Ruby Tuesday, The Cheesecake Factory, Panera, Denny’s, Domino’s Pizza, and White Castle.

The majority of chain restaurant employees received salary increases during 2012, and this trend is expected to continue climbing during 2013. In 2012 an average 85% of corporate office employees and 74% of restaurant managers received a base pay increase last year. Merit increases both for the field and the corporate office, which slowed down considerably during the recession, have shown consistent increases and have established themselves firmly in the 2.5%-3.0% range over the last 3 years. However, merit increases are not expected to reach the range seen in the years before the recession (4.0%-4.5%) any time soon. When it comes to base pay merit increases for corporate office employees, size mattered in 2013. Large restaurant companies (those with annual sales over $500 million) budgeted larger increases for their employees than those budgeted by small (those with annual sales under $150 million) and medium-sized companies.

Company size also played a substantial role in 2012 results in terms of the relative weight of top executive compensation. On average, compensation of top operations executives (defined as CEO, President, and COO) represents 5.2% of total company payroll costs. For small companies the weight of top executive compensation grows to 6.3% of total payroll costs, while for companies with over $500 million in sales annually the percentage is only 2.6%.
The survey results recently published by Workforce Intelligence (formerly People Report) also highlighted the large importance for restaurant managers placed on variable pay. While not all restaurant companies offer a bonus program to their corporate executives and directors, 100% reported that their restaurant managers are eligible to receive bonuses.

“The relative importance of bonuses increases as we go up through the restaurant management ranks, with General Managers and Multi Unit Mangers typically seeing their total bonus amounts for the year representing between 20%-30% of what they get in base salary. Based on these numbers it is easy to see why restaurant managers were in a tough spot when those bonuses disappeared during the recession,” said Victor Fernandez, Executive Director of Insights for Workforce Intelligence (formerly People Report) and Financial Intelligence (formerly Black Box Intelligence).

For restaurant managers, the percentage of the weight based on individual performance when calculating their bonuses is on average about 10%, with group performance being about 85%. The most widely used criteria for group performance when evaluating both corporate office employees and restaurant managers is profit.

The size of the organization was also a factor regarding target bonuses for corporate office employees. For 2013, target bonuses for corporate office employees tend to be lower in small companies than in the rest of the industry overall, while target bonuses for corporate employees in large companies tended to be slightly higher than for the rest of the industry.

Workforce Intelligence (formerly People Report) is currently collecting information for the “Benefits and Other Rewards” section of the annual survey, with the results scheduled to be published in August. To participate in the survey contact Victor Fernandez (victor.fernandez(at)prbbi(dot)com). Results of both surveys are also available for purchase. For sales information please contact Melissa Papaleo (Melissa.papaleo(at)prbbi(dot)com)

Workforce Intelligence (formerly People Report) provides service-sector human capital and workforce analytics for its members on a monthly basis. Its sister company, Financial Intelligence (formerly Black Box Intelligence), provides weekly financial and market data for the restaurant industry. Together they report on over 30,000 restaurant units, one million employees and 35 billion dollars in sales. They are also the producers of two leading restaurant industry conferences: Summer Brand Camp and the Best Practices Conference. Each held annually in Dallas, Texas.